Sidbi To Begin Export Factoring

The Small Industries Development Bank of India (SIDBI) has decided to undertake export factoring for small units. It has applied for membership of Factors Chain International (FCI), a Netherlands-based association of factoring companies.

Shailendra Narain, managing director, SIDBI, told Business Standard recently that the Singapore-based DBS Factors will be closely associated with SIDBI for the training of its staff as also for providing software and other technology supports.

However, a formal tie-up is not being considered at the present juncture, he added.

The Small Industries Development Bank of India has also applied to the Reserve Bank of India (RBI) for permission to undertake export factoring. It expects to do a business of Rs 1,000 crore within a period of two years.

At present, there is only one company in the private sector that undertakes export factoring.

And, though the existing factoring companies have earmarked a fixed per cent of their business on this line, it has not really picked up. Since small scale units account for nearly 45 per cent of the countrys export, there is good scope for export factoring for small units, Narain said.

FCI provides the factors with information on local players and their activities. Factors in many countries depend on it for correspondent factors abroad.

SIDBI has also introduced a programme under which it assists small units to get international credit ratings. In order to enable the small units to obtain this rating, Small Industries Development Bank of India has granted a subsidy of Rs 25,000 each to about 40 units, Narain said.

For domestic credit ratings, it has given subsidy of Rs 25,000 each to about 1000 small units, he added. It has also begun helping the small units to seek ISO recognition for quality of the products and services.

The bank has offered the small units to train their staff in total quality management through seminars and training activities. So far, 130 units have taken advantage of this programme, said Narain.